(-Secretase activity is the final cleavage event that releases the A( or P3, respectively, from the corresponding (- or (-secretase cleaved carboxyl terminal fragments of the APP. No protease responsible for this highly unusual, purportedly intramembranous, cleavage has been isolated. We examined the substrate specificity of (-secretase by mutating various residues within or adjacent to the transmembrane domain of the APP and then analyzing A( production from cells transfected with these mutant APPs by ELISA and mass spectrometry. A( production was also analyzed from a subset of TMD APP mutants that showed dramatic shifts in (-secretase cleavage in the presence or absence of pepstatin, an inhibitor of (-secretase activity. These studies demonstrate that (-secretase's cleavage specificity is primarily determined by location of the (-secretase cleavage site of APP with respect to the membrane, and that (-secretase activity is due to the action of multiple proteases exhibiting both a pepstatin-sensitive activity and a pepstatin-insensitive activity. Given that (-secretase is a major therapeutic target in Alzheimer's disease these studies provide important information with respect to the mechanism of A( production that will direct efforts to isolate the (-secretases and develop effective therapeutic inhibitors of pathologically relevant (-secretase activities.